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Reliable news to break corn's upside

Agriculture.com Staff 04/25/2010 @ 2:44pm

Corn: With the beans providing the support to corn over the last couple days, there is little surprise that a setback in the beans would translate into corn falling back.                                 

Fundamentals took over again today, taking the December corn back down to 1 1/4 of a penny shy of last support of 375 1/4. While it was unlikely the support was going to be broken on a Friday, it is possible to do so to start the week. Strong support will need more reliable news to break it. That news could be a large planting pace number Monday afternoon. This would also suggest that we could hold that support Monday as well. Last week sellers jumped ahead of the planting report, only to get a surprisingly low number and had to buy a good part of it back Tuesday. Even though all the producers you talk to will say the number should be around 50%, are sellers really willing to go out on a limb twice? If they choose to take that risk again on Monday, selling will have to break major support because there just isn’t much room left to sell without doing so. Either way, by Tuesday morning we will know if support is to be taken out. As most know already, this rain system will be impacting everyone adding more to the bearish tone that already exists. Those looking for a run higher in corn will have to rely on more spec buying of the beans and wheat for near term support. Those looking for corn to fall simply need support to be taken out early next week. Looking forward in weather, the forecast has little change from earlier in the week. Things dry out early next week before the next system moves in on Thursday. Lastly, keep in mind that the trade's idea of an early planting pace is 50% planted before May 1st. That will be talked about much more next week especially after seeing Monday's number. Last week heavy resistance came in at 400, this week it was 390 and next week may be tough to rally corn without large speculative buying.

Direction: Sideways is still our expected direction. Lower hedge prices may be seen next week which does not allow much of a range for the corn to trade in. We will look at support to be 375 1/4 to start next week with resistance at least 390 if not lower…Ryan Ettner

Working Trades: (03/24) Bought July 380 call/sell July 440 call/sell July 340 put 4 1/2, risk to -4, objective 19. Closed 0. (04/19) Bought July 359, risk 349, objective 373 3/4. Closed 361. ***Disclaimer*** The commentary and trades below are derived from technical indicators provided in our Allendale Advanced Charts pages and may not correspond with the fundamental commentary above.

Advanced Charts Direction: After corn found it too tough to push through the downtrend today it headed south instead. Volume was large, so this weakness could continue next week. Key support is not far below at 355. We remain short from 372…Monica Moehring

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